‘Govt should introduce tax-friendly policies’

LAHORE: The government should introduce tax-friendly policies, while in Pakistan, the authorities are putting pressure on the existing taxpayers instead of enhancing the tax base, experts said on Saturday.
Economist Naveed Anwar Khan said, "What we need is a tax policy this is neither adversarial nor accommodative,” adding that accommodating tax evaders has gone too far.
There are high-rise buildings in every major city that are challenging the tax collectors. There are luxury cars worth millions plying freely driven by the influential that pay no taxes. Then there are numerous government servants that are living beyond their means, he said.
A peek in the register of schools charging fee above $500 per month would reveal the names of parents that are outside the tax net. What is stopping the tax collectors to confront these tax evaders? He asked. "We have destroyed the beauty of the value-added tax by increasing its rate to collect higher revenues just because we lack the courage to nab influential tax evaders," he Khan said.
He said these taxes are burdening poor more than the affluent.
"We negotiate with the traders because they affect the economy by observing shutterdown strikes. This power does not grant them the licence to remain outside the tax net," he said.
Any tax official in developed world or even in India would arrest even an MPA or MNA if he fails to pay due taxes after a notice has been served for the payment. "I doubt if even a single MPA or MNA has been served notice for non-payment of taxes," he added.
Another economist Faisal Qamar said, "We do not have tax-friendly policies." People fear the tax authorities more than they fear the police.
He said it has been observed that the tax officials are at liberty to generate any tax liability without any rationale. The aggrieved party has to fight it out at various fora before it get the relief, Qamar said.
Income and sales tax refunds are inordinately delayed to force the claimant to enter into a deal with the official authorised to sanction refunds.
“These are norms in our tax collecting culture,” he said, adding that there is no accountability of the tax collectors.
If a case of wrong assessment is proved the assessing officers should be penalised, he said, adding that the tax officials are required to assess fair tax and it should be neither excessively high nor abnormally low. These tax officials are trained in their fields.
A simple exercise of going through the records of tax returns that were promptly accepted without any objection or with minor objections; and returns where tax collector raised objection would show that there might have been more flaws in returns that were promptly accepted than the returns where objections were raised.
He said various efforts to reform the Federal Board of Revenue (FBR) have failed because it is not in the interest of the majority of the human resource attached with the top revenue authority. It would be impossible to implement tax reforms with the existing human resource in Pakistan, he said.
Qamar said the government must understand that the glory days of retrospective tax are over and all taxes levied retrospectively should be withdrawn.
"A government that cannot take action against the tax evaders has no justification to impose additional taxes on the already taxed sectors."